Direct costs (or COGS) comparisons

by Adina Luca, September 21, 2015

Keep reports on variations of your categories of expenses that form your Direct Cost. That is your first key to ensure the profitability of your service and you want to know how things have changed over time. The changes in your cost of unit can tell you whether you are becoming more efficient or markets are changing and you can no longer get labour at the same rate. What you want is to build in as much variability in your Direct Cost as possible to reflect profitability so that when your revenue goes down, your Direct Costs also follow and you avoid dangerous changes such as layoffs.